national income explanations

Question 1

wealth vs income

Answer 1

households own wealth of nation, own stock of land, labour and capital used to produce goods and services

they supply these factors to earn income such as rents, wages, interest and profit. Then they use this money to buy goods and services produced by firms

Question 2

injections

Answer 2

gov spending
investment
export

Question 3

withdrawals

Answer 3

savings
taxes
imports

Question 4

multiple size depends on

Answer 4

most imp - size of withdrawals , how much add income is saved by houses , how much on imported goods , how much returned to gov

Question 5

Income method

Answer 5

Total of all four factor incomes weaves rent interest profits

Question 6

Output method

Answer 6

Total value of vlaue added by every firm in the coming

Question 7

Expenditure method

Answer 7

Total of all final expenditure on consumer goods and capital goods by households firms and governments and foreign residents

Question 8

Example of multiplier effect

Answer 8

Gov increasrvteachers wage ( increase G)
Teachers save dole but spend some ( increase I )
Have to buy more stock from abroad ( imports = leakage)
New staff have higher levels of disposable income ( increase C )
Have to pay income tax which is a leakage

Question 9

Size of multiplier depends on

Answer 9

• size of withdrawal from system
  How much income solved by households firms and

Question 10

Multiplier (k) formula

Answer 10

= total increase AD / initial injection